Can You Collect Unemployment and Social Security?

Amid the recent tech layoffs and other downsizing, older workers could face employment challenges. If you’ve recently lost your job and are nearing retirement age, you may be eligible to collect benefits. You could apply for unemployment and Social Security and receive both at the same time.

Unemployment benefits are distributed to workers who have lost their financial support and meet certain requirements. If you are at least age 62 or have become disabled, you could also consider starting Social Security payments. While taking unemployment and Social Security benefits simultaneously may be possible, you’ll want to be aware of certain factors that could impact your income and taxes.

If you lose your job and are nearing retirement or are disabled, consider:

If you lose your job, evaluate your options to see if you qualify for unemployment benefits. “To be eligible for unemployment compensation in most states, unemployment must be through no fault of your own,” says Sabrina Taylor, a certified rehabilitation counselor, work incentives practitioner and assistant professor at Coppin State University. “Contact your state’s unemployment insurance program once you become unemployed.” File your claim with the state where you worked, and expect a span of two to three weeks after your claim is filed before receiving your first benefit check, Taylor says. As you look for a new job, you can schedule an appointment with an employment office in your area.

If you are unemployed and close to retirement age, you could opt to receive Social Security payments. Before beginning the process, “it’s important to understand that if you take your Social Security early, you will experience a cut in benefits,” says Chuck Czajka, a certified Social Security claiming strategist and founder of Macro Money Concepts in Stuart, Florida. “Waiting until your full retirement age will allow you to collect 100% of your benefits and does not affect your unemployment.”

Waiting until age 70 to start Social Security payments will lead to a bigger monthly benefit. If you go back to work after you have signed up for Social Security and you are younger than full retirement age, you will only be able to earn up to a certain amount before some of your benefit will be temporarily withheld.

If you want to receive Social Security payments, you can fill out an application online, call the Social Security Administration or visit a nearby office. Once you’ve been approved, you could receive a Social Security check every month for the rest of your life.

While it’s possible to receive unemployment and Social Security benefits at the same time, there are some caveats to consider. “Social Security, for both purposes of taxation and for claiming before full retirement age, does not consider unemployment benefits as earnings,” says Jamie Hopkins, managing partner of wealth solutions at Carson Group in Omaha, Nebraska. “As such, unemployment benefits do not affect Social Security retirement benefits.” You can check with your state’s unemployment office to see how your unemployment benefits will be impacted by Social Security, as each state dictates its own rules.

If you are disabled or become disabled after spending years working and paying into the Social Security system, you may be eligible for benefits that will help cover your lost income. Those who file for Social Security disability benefits will need to go through a process that includes providing medical records and documentation. It may take time, from months to several years, to get approved for Social Security disability payments.

Social Security disability and unemployment benefits serve different purposes. Unemployment benefits aim to help those who are between jobs and need to support themselves. Disability benefits are geared toward individuals who can no longer work at the same capacity, or work at all, due to their condition. For this reason, filing for both could be contradicting.

Still, it may be possible to receive both benefits. “Individuals receiving disability benefits have been determined unable to work due to their disability,” Taylor says. “They will just need to justify to Social Security that their disability does impact their ability to prepare for, obtain or maintain suitable and gainful employment.”

Retirement account distributions or pension payments could impact your unemployment benefits because they are considered a form of income. “Retirement payments such as receiving a pension or 401(k) distribution may reduce an individual’s unemployment compensation,” Taylor says.

It can be helpful to explore your options and talk to various agencies before filling out applications for government benefits. You don’t want one type of benefit to negatively impact your ability to claim another. Overall, the best decision will be one that allows you to live as comfortably as possible as you transition into a new job or retirement.